Compulsion Games, the studio behind South of Midnight, We Happy Few and Contrast, has fully separated from Xbox and become an independent developer once again. The split follows negotiations after Microsoft's business "reset" last month under new gaming CEO Asha Sharma, and marks a significant shift for the studio, which regains ownership of its intellectual property and publishing rights after operating under Xbox Game Studios.

CEO Guillaume Provost confirmed the change to GamesBeat, saying publishing rights are transferring back to Compulsion during a transition period, meaning future game purchases will directly support the studio rather than Microsoft. Provost said keeping the team together was his priority throughout the process, though some staff reportedly left or sought new jobs once the risk of closure became apparent; most leaders chose to stay. South of Midnight, released in 2025, received decent reviews and later won awards including Games for Impact at The Game Awards and Outstanding Achievement in Animation at the D.I.C.E. Awards. Provost said the studio will move cautiously and may not immediately pursue new funding, comparing the current climate to when he originally founded the company.